- Jack Bogle Investment History
- Jack Bogle Investment Advice
- Conclusion: Jack Bogle Investment Advice
John C. ‘Jack’ Bogle was the founder of the investment firm Vanguard and is widely regarded as the father of modern index funds. He spent decades railing against active investing in general and high-fee mutual funds in particular.
In this article, we’ll take a look at 10 pieces of investment advice from Jack Bogle that highlight his investment philosophy. Let’s get started!
Jack Bogle Investment History
Jack Bogle’s career began at the Wellington Fund, one of the oldest mutual funds in the US, in 1955. He spent nearly 20 years at the fund before founding Vanguard in 1974.
A few years later, Bogle introduced the First Index Investment Trust – the first modern index fund and a precursor to today’s S&P 500 index funds. The fund received a lukewarm welcome from the investment community, but grew in popularity among public investors. Bogle spent much of the next two decades speaking out against the mutual fund industry, which he saw as costly and unable to deliver the performance it promised everyday investors.
Bogle gave up his position as the CEO of Vanguard in 1996 and died in 2019. When he retired from Vanguard, Fortune named him “one of the four investment giants of the twentieth century.” His introduction of index funds is considered to be one of the most consequential transformations in investing in modern history.
Jack Bogle Investment Advice
Bogle’s investment philosophy focuses on long-term investing. He is a strong proponent of the index funds he helped create, and advises investors to grow with the US market.
Let’s take a look at 10 pieces of advice Bogle offered investors over his career.
1. Buy and Hold
“Buy and hold” succinctly sums up Jack Bogle’s advice to investors. As Bogle put it, “Common sense tells us — and history confirms — that the simplest and most efficient investment strategy is to buy and hold all of the nation’s publicly held businesses at very low cost.”
So, instead of trying to actively trade in and out of stocks, Bogle recommends simply buying into the market and adding to your investment over time.
2. Stay the Course
Bogle’s second piece of advice, to “stay the course,” follows from his buy and hold investment strategy. He tells investors that they shouldn’t let “changes in the market…change your mind” and that you should “never, never, never be in or out of the market. Always be in at a certain level.”
According to Bogle, it’s important to continue to hold even if the market is crashing and most other investors are panicking.
3. Don’t Try to Beat the Market
For nearly 40 years, Bogle was one of the loudest voices in the investment community speaking out against active investing. “Short-term betting is not a good way to go,” he said.
Bogle believed that fund managers who claimed they could consistently beat the market were being untruthful. Instead of investing with these funds, Bogle suggested that investors should try to match the market and keep costs as low as possible.
4. Buy the Whole Stock Market
Instead of picking winners and losers, Bogle advised investors to buy the entire US stock market. He called the S&P 500 a “great proxy” for this purpose, and it was the index funds that he introduced through Vanguard that made buying the whole stock market possible for many investors.
5. Investing Doesn’t Require an Expert
Bogle preached simplicity in investing. After all, buying and holding the entire stock market in index funds is about as uncomplicated as investing can get. He told investors that “unless you need a financial adviser to help you get started in that routine, you probably don’t need a financial adviser at all.”
6. Keep Emotion Out of Investing
One of Bogle’s mantras was that “impulse is your enemy.” He advised investors to “eliminate emotion from your investment program” and to have “avoid changing [your] expectations in response to the ephemeral noise coming from Wall Street.”
This goes back to Bogle’s idea of staying the course. No matter how exciting the market may be or how worried other investors may become, you should follow through on your plan and not let anything get in the way.
7. Costs Matter
One of the reasons that Bogle disliked mutual funds so much is that he believed they overcharged everyday investors. In developing index funds and encouraging investors to buy and hold for the long term, one of Bogle’s goals was to keep investors’ costs as low as possible.
As Bogle put it: “In investing, you get what you don’t pay for. Costs matter.”
8. Look at Companies, Not Stocks
Bogle called the stock market “a giant distraction to the business of investing.” By that, he meant that prices are simply noise – what really matters are companies’ fundamentals. Look for companies that are consistently delivering on their bottom lines and growing their business over time and don’t worry about how much the shares cost.
9. Keep It Simple
As we noted, Bogle believed in simplicity when it comes to investing. He told investors, “when there are multiple solutions to a problem, choose the simplest one.”
In practice, that means investing in things like low-cost index funds rather than developing a complex scheme to beat the market. It also means choosing investments that are simple enough for everyday investors to understand as opposed to choosing investments that are so complex they require a financial advisor.
10. Stick to the Plan
Bogle’s exhortation to stay the course is so central to his investment advice that it’s worth reiterating. He warned investors that “the greatest enemy of a good plan is the dream of a perfect plan.”
The solution? “Stick to the good plan.”
Conclusion: Jack Bogle Investment Advice
Jack Bogle was the founder of Vanguard and is widely considered to be the father of modern index funds. He spent much of his career encouraging investors to match the market rather than try to beat it and developed Vanguard’s portfolio of index funds to make that possible.
Above all else, Bogle believed that a buy and hold strategy is the best course for investors and that it is essential for investors to stick to that strategy no matter what happens.